THIS OPTION AND THE SECURITIES WHICH MAY BE PURCHASED UPON EXERCISE
OF THIS OPTION HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "ACT"), AND HAVE BEEN ACQUIRED FOR INVESTMENT
AND NOT WITH A VIEW TO, OR IN CONNECTION WITH THE SALE OR
DISTRIBUTION THEREOF. NO SALE, TRANSFER OR DISTRIBUTION MAY BE
EFFECTED WITHOUT AN EFFECTIVE REGISTRATION STATEMENT RELATING
THERETO OR AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT
SUCH REGISTRATION IS NOT REQUIRED.
NON-STATUTORY OPTION AGREEMENT
THIS INCENTIVE STOCK OPTION AGREEMENT made as of the ___ day
of ________________, 1999, by and between DYNAMIC ASSOCIATES, INC.,
a Nevada corporation (hereinafter called "Company"), and XXXXX X.
XXX (hereinafter called "Optionee").
R E C I T A L S
A. The Board of Directors of the Company has adopted the
Company's 1997 Incentive Stock Option Plan (the "Plan") for the
purpose of attracting and retaining the services of selected key
employees (including officers and employee directors) who
contribute to the financial success of the Company or its parent or
subsidiary corporations.
B. Optionee is an eligible person, and this Agreement is
executed pursuant to, and is intended to carry out the purposes of,
the Plan in connection with the Company's grant of a stock option
to the Optionee.
C. The granted option is not intended to be an incentive
stock option ("Incentive Option") within the meaning of Section 422
of the Internal Revenue Code.
NOW, THEREFORE, it is hereby agreed as follows:
1. Grant of Option. Subject to and upon the terms and
conditions set forth in this Agreement, there is hereby granted to
Optionee, as of the date of this Agreement (the "Grant Date"), a
stock option to purchase up to 1,000,000 shares of the Company's
Common Stock (the "Optioned Shares") from time to time during the
option term at the option price of $_______ per share.
2. Plan. The options granted hereunder are in all instances
subject to the terms and conditions of the Plan. In the event of
any conflict between this Agreement and the Plan, the provisions of
the Plan shall control, except as expressly noted herein to the
contrary. Optionee acknowledges receipt of a copy of the Plan and
hereby accepts this option subject to all of the terms and
conditions of the Plan. Optionee agrees to accept as binding,
conclusive and final all decisions or interpretations of the Board
upon any questions arising under the Plan.
3. Option Term. This option shall have a maximum term of
five (5) years measured from the Grant Date and shall accordingly
expire at the close of business on ________, 2004 (the "Expiration
Date"), unless sooner terminated in accordance with Paragraph 6 or
Paragraph 8(a).
4. Option Nontransferable; Exception. This option shall be
neither transferable nor assignable by Optionee, either voluntarily
or involuntarily, other than by will or by the laws of descent and
distribution and may be exercised, during Optionee's lifetime, only
by Optionee.
5. Dates of Exercise. The option will vest and become
exercisable with respect to one-third (1/3) of the Optioned Shares
upon the execution of that certain Employment Agreement between
Dynamic Associates, Inc. and Xxxxx X. Xxx (the "Employment
Agreement"); with respect to one-third (1/3) of the Optioned Shares
upon the first (1st) anniversary of execution of the Employment
Agreement; and with respect to the remaining one-third (1/3) of the
Optioned Shares upon the second (2nd) anniversary of execution of
the Employment Agreement. Once exercisable, options shall remain
so exercisable until the expiration or sooner termination of the
option term under Paragraphs 6 or 8(a) of this Agreement. In no
event, however, shall this option be exercisable for any fractional
shares.
6. Accelerated Termination of Option Term. The option term
specified in Paragraph 3 shall terminate (and this option shall
cease to be exercisable) prior to the Expiration Date should one of
the following provisions become applicable:
(a) Except as otherwise provided in subparagraphs (b),
(c) or (d) below, should Optionee cease to be an Employee of the
Company at any time during the option term, then the period for
exercising this option shall be reduced to a three (3) month period
commencing with the date of such cessation of Employee status, but
in no event shall this option be exercisable at any time after the
Expiration Date. Upon the expiration of such three (3) month period
or (if earlier) upon the Expiration Date, this option shall
terminate and cease to be outstanding.
(b) Should Optionee die while this option is
outstanding, then the executors or administrators of Optionee's
estate or Optionee's heirs or legatees (as the case may be) shall
have the right to exercise this option for the number of shares (if
any) for which the option is exercisable on the date of the
optionee's death. Such right shall lapse and this option shall
cease to be exercisable upon the earlier of (i) six (6) months from
the date of the optionee's death or (ii) the Expiration Date.
(c) Should Optionee become permanently disabled and
cease by reason thereof to be an Employee of the Company at any
time during the option term, then Optionee shall have a period of
six (6) months (commencing with the date of such cessation of
Employee status) during which to exercise this option; provided,
however, that in no event shall this option be exercisable at any
time after the Expiration Date. Optionee shall be deemed to be
permanently disabled if Optionee is, by reason of any medically
determinable physical or mental impairment expected to result in
death or to be of continuous duration of not less than twelve (12)
months, unable to perform his usual duties for the Company or its
Parent or Subsidiary corporations. Upon the expiration of the
limited period of exercisability or (if earlier) upon the
Expiration Date, this option shall terminate and cease to be
outstanding.
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(d) Should Optionee's status as an Employee be
terminated for cause (as defined in his Employment Agreement of
even date herewith, as such agreement may be amended or superceded
from time to time) or should Optionee make or attempt to make any
unauthorized use or disclosure of the confidential information or
trade secrets of the Company or any parent or subsidiary
corporations, then in any such event this option shall terminate
and cease to be exercisable immediately upon such termination of
Employee status or such unauthorized disclosure or use of
confidential or secret information or attempt thereat.
(e) For purposes of this Paragraph 6 and for all other
purposes under this Agreement, Optionee shall be deemed to be an
Employee of the Company and to continue in the Company's employ for
so long as Optionee remains an Employee of the Company or one or
more of its parent or subsidiary corporations as such terms are
defined in the Plan.
7. Adjustment in Option Shares.
(a) In the event any change is made to the Common Stock
issuable under the Plan by reason of any stock split, stock
dividend, combination of shares, or other change affecting the
outstanding Common Stock as a class without receipt of
consideration (as set forth in the Plan), then appropriate
adjustments will be made to (i) the total number of Optioned Shares
subject to this option and (ii) the option price payable per share
in order to reflect such change and thereby preclude a dilution or
enlargement of benefits hereunder.
(b) If the Company is the surviving entity in any merger
or other business combination, then this option, if outstanding
under the Plan immediately after such merger or other business
combination shall be appropriately adjusted to apply and pertain to
the number and class of securities to which Optionee immediately
prior to such merger of other business combination would have been
entitled to receive in the consummation of such merger or other
business combination.
8. Special Termination of Option.
(a) In the event of one or more of the following
transactions (a "Corporate Transaction"):
(i) a merger or acquisition in which the Company
is not the surviving entity, except for a transaction the principal
purpose of which is to change the State of the Company's
incorporation;
(ii) the sale, transfer or other disposition of all
or substantially all of the assets of the Company; or
(iii) any other corporate reorganization or
business combination in which fifty percent (50%) or more of the
Company's outstanding voting stock is transferred, or exchanged
through merger, to different holders in a single transaction or a
series of related transactions; then this option shall terminate
upon the consummation of such Corporate Transaction and cease to be
exercisable, unless it is expressly assumed by the successor
corporation or parent thereof. The Company can give no assurance
that the options shall be assumed and shall provide Optionee with
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at least thirty (30) days prior written notice of the specified
date for the triggering event, and it may occur that some options
outstanding under the Plan will be assumed while these options are
terminated.
(b) In the event of a Corporate Transaction, the Company
may, at its option, accelerate the vesting schedule contained in
Section 5 hereof, but shall have no obligation to do so. The
Company shall have the right to accelerate other options
outstanding under the Plan or any other plan, even if it does not
accelerate the options of Optionee hereunder.
(c) This Agreement shall not in any way affect the right
of the Company to make changes in its capital or business structure
or to merge, consolidate, dissolve, liquidate or sell or transfer
all or any part of its business or assets.
9. Privilege of Stock Ownership. The holder of this option
shall not have any of the rights of a shareholder with respect to
the Optioned Shares until such individual shall have exercised the
option and paid the option price in accordance with this Agreement.
10. Manner of Exercising Option.
(a) In order to exercise this option with respect to all
or any part of the Optioned Shares for which this option is at the
time exercisable, Optionee (or in the case of exercise after
Optionee's death, Optionee's executor, administrator, heir or
legatee, as the case may be) must pay the aggregate option price
for the purchased shares in cash or such other form of
consideration as permitted under the Plan.
(b) This option shall be deemed to have been exercised
with respect to the number of Optioned Shares specified by Optionee
at such time as the Optionee shall have been delivered appropriate
consideration to the Company therefor. As soon thereafter as
practical, the Company shall mail or deliver to Optionee or to the
other person or persons exercising this option a certificate or
certificates representing the shares so purchased and paid for.
11. Compliance with Laws and Regulations.
(a) The exercise of this option and the issuance of
Optioned Shares upon such exercise shall be subject to compliance
by the Company and Optionee with all applicable requirements of law
relating thereto and with all applicable regulations of any stock
exchange on which shares of the Company's Common Stock may be
listed at the time of such exercise and issuance.
(b) In connection with the exercise of this option,
Optionee shall execute and deliver to the Company such
representations in writing as may be requested by the Company in
order for it to comply with the applicable requirements of federal
and state securities laws.
12. Successors and Assigns. Except to the extent otherwise
provided herein, the provisions of this Agreement shall insure to
the benefit of; and be binding upon, the successors,
administrators, heirs, legal representatives and assigns of
Optionee and the successors and assigns of the Company.
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13. Liability of Company.
(a) If the Optioned Shares covered by this Agreement
exceed, as of the Grant Date, the number of shares of Common Stock
which may without shareholder approval be issued under the Plan,
then this option shall be void with respect to such excess shares
unless shareholder approval of an amendment sufficiently increasing
the number of shares of Common Stock issuable under the Plan is
obtained in accordance with the provisions of Section 18 of the
Plan.
(b) The inability of the Company to obtain approval from
any regulatory body having authority deemed by the Company to be
necessary to the lawful issuance and sale of any Common Stock
pursuant to this option without the imposition of requirements
unacceptable to the Company in its reasonable discretion shall
relieve the Company of any liability with respect to the non-
issuance or sale of the Common Stock as to which such approval
shall not have been obtained. The Company, however, shall use its
best efforts to obtain all such approvals.
14. No Employment Contract. Except to the extent the terms
of any written employment contract between the Company and Optionee
may expressly provide otherwise, the Company (or any parent or
subsidiary corporation of the Company employing Optionee) shall be
under no obligation to continue the employment of Optionee for any
period of specific duration and may terminate Optionee's status as
an Employee at any time, with or without cause.
15. Notices. Any notice required to be given or delivered to
the Company under the terms of this Agreement shall be in writing
and addressed to the Company in care of its Secretary at its
corporate offices. Any notice required to be given or delivered to
Optionee shall be in writing and addressed to Optionee at the
address indicated below Optionee's signature line on this
Agreement. All notices shall be deemed to have been given or
delivered upon personal delivery or upon deposit in the U.S. mail,
postage prepaid and properly addressed to the party to be notified.
16. Loans or Guarantees. The Company may, in its absolute
discretion and without any obligation to do so, assist Optionee in
the exercise of this option by (i) authorizing the extension of a
loan to Optionee from the Company, (ii) permitting Optionee to pay
the option price for the purchased Common Stock in installments
over a period of years, or (iii) authorizing a guarantee by the
Company of a third party loan to Optionee. The terms of any loan,
installment method of payment or guarantee (including the interest
rate, the collateral requirements and terms of repayment) shall be
established by the Company in its sole discretion.
17. Construction. This Agreement and the option evidenced
hereby are made and granted pursuant to the Plan and are in all
respects limited by and subject to the Plan. All decisions of the
Company with respect to any question or issue arising under the
Plan or this Agreement shall be conclusive and binding on all
persons having an interest in this option.
18. Governing Law. The interpretation, performance, and
enforcement of this Agreement shall be governed by the laws of the
State of Nevada.
IN WITNESS WHEREOF, the Company has caused this Agreement to
be executed in duplicate on its behalf by its duly authorized
officer and Optionee has also executed this Agreement in duplicate,
all as of the day and year indicated above.
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DYNAMIC ASSOCIATES, INC.,
a Nevada corporation
By: ________________________________
Title: ________________________________
_________________________________________
XXXXX X. XXX, Optionee
Address: _______________________________
_______________________________
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